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Euro and economic governance

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In 1989 the Delors report created the road map to European economic and monetary union (EMU). As a complement to the single market, the euro allowed a deepening of European economic integration by means of a common monetary policy and the coordination of national economic policies. The euro has benefited from a strong monetary pillar based on an independent central European bank, but from the start it has lacked a similarly strong economic pillar. The Stability and Growth Pact and the Eurogroup have clearly been insufficient in ensuring an adequate coordination of national economic policies – a necessity in the case of a shared currency.


Against this background, the acques Delors Institute’s work on the euro has been focused since the 1990s on the need to endow EMU with a genuine economic pillar. As Jacques Delors stated in 1999, “[The euro] must [...] become an instrument of economic and social progress for Europeans and factor of stability for the world economy. To achieve this, we consider that – wholly in keeping with the treaties – a balance must be reached, as is the case in each country, between the economic pole and the monetary one” (Making the EMU work, foreword by Jacques Delors and Giorgio Ruffolo, Studies and Research No. 6, March 1999).


But EMU’s failings were obscured by the positive record of the the euro’s first ten years. Only with the public debt crisis in the euro zone did member states become aware of the need to strengthen EMU’s economic pillar. In this crisis context, the Jacques Delors Institute’s work on the euro is important in two ways.

First, the Jacques Delors Institute is contributing to the debate on solutions to the current crisis. Particular attention is given to the dialectic of solidarity and responsibility within the euro zone. Jacques Delors underscores that this solidarity “is based not on generosity but on the interest of each member state (even if only because of the interdependence between states) and on protection of a shared project”. He reminds us that “there cannot be more solidarity without increased responsibility on the part of each member state” (Solidarity within the Eurozone: how much, what for, for how long?, foreword by Jacques Delors, Policy Paper No. 51, February 2012).


In addition,the Jacques Delors Institute has emphasised since the start of the crisis that austerity without growth will allow no improvement to the situation. Notre Europe-Jacques Delors Institute’s response to this austerity-growth dilemma is based on Tommaso Padoa-Schioppa’s formula, “To states austerity, to Europe growth”. It stresses the added value of EU action, particularly involving investment, in restarting growth in Europe (Declaration of the Jacques Delors Institute’s European Steering Committee).


Second, the lessons of this crisis must be learnt so that EMU can emerge stronger. The Jacques Delors Institute is therefore contributing to the current reform of European economic governance. A group of experts on European economic and political issues – the “Padoa-Schioppa Group” was assembled to present a long-term road map for strengthening EMU. As Tommaso Padoa-Schioppa emphasised in his distinction between a weak power and a limited power, the question is not of increasing the EU’s competences but rather of endowing it with tools which are indispensable if it is to act within the competences it has been given. “The Union’s power must be limited, but not weak” (Tommaso Padoa-Schioppa, Contre la courte vue, 2010).

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